KB Asset Management "If You Aim to Benefit from Yen Rebound, 'RISE US 30-Year Treasury Yen Exposure ETF'"

Recently, as the Japanese yen has strengthened, investment products expected to benefit from this trend are gaining attention. In response, KB Asset Management announced on the 8th that the ‘RISE US 30-Year Treasury Yen Exposure (Synthetic H) Exchange-Traded Fund (ETF)’ is emerging as a promising product in this context.

According to the foreign exchange market, the KRW/JPY exchange rate surpassed the 960 won level on the 5th, marking the highest point since May last year. The Bank of Japan (BOJ) has begun raising interest rates under the pretext of normalizing monetary policy, while the United States is expected to cut rates soon. This has led to expectations that the interest rate gap between the US and Japan will narrow, driving up the value of the yen.

The ‘RISE US 30-Year Treasury Yen Exposure (Synthetic H) ETF’ is an exchange-traded fund that seeks capital gains from investing in 30-year US Treasury bonds and foreign exchange gains from fluctuations in the yen’s value.

It has steadily gained popularity among investors betting on falling US interest rates and a rising Japanese yen, with its net asset size increasing to approximately 350 billion KRW since its listing in December last year. The average daily trading volume also surged significantly from 480,000 shares to 740,000 shares within a month.

Supported by the yen’s strength, the fund’s returns are also on the rise. The recent one-month return is 18.74%, and the three-month return is 17.98%.

The underlying index of the ‘RISE US 30-Year Treasury Yen Exposure (Synthetic H) ETF’ is the ‘KIS US Treasury 30-Year Yen Exposure Index,’ which calculates the investment performance of US Treasury bonds with a remaining maturity of over 20 years in yen. It applies currency hedging to the USD/JPY exchange rate and currency unhedging to the KRW/JPY exchange rate, enabling investment in US long-term government bonds in yen regardless of fluctuations in the dollar’s value.

In the future, if the US cuts interest rates and the interest rate gap with Japan narrows, the operating costs for USD/JPY currency hedging will decrease, potentially leading to additional yield increases.

Additionally, since April, the ‘RISE US 30-Year Treasury Yen Exposure (Synthetic H) ETF’ has changed its operation method to monthly dividends in response to investor needs. Previously, interest generated from the underlying 30-year US Treasury bonds was reinvested into the ETF’s net asset value, but now, funds equivalent to the interest generated from US long-term bonds are secured and distributed to investors monthly.

Kim Chan-young, Head of the ETF Business Division at KB Asset Management, stated, “The ‘RISE US 30-Year Treasury Yen Exposure (Synthetic H) ETF’ is suitable for investors expecting an appreciation of the yen due to the narrowing interest rate gap between the US and Japan in the second half of the year.” He added, “The biggest strength of this product is that it allows convenient investment in US long-term bonds and the yen at the same time.”